Wal-Mart's bright idea


Published: Thursday, January 11, 2007 at 6:01 a.m.
Last Modified: Wednesday, January 10, 2007 at 1:26 p.m.
As a way to cut energy use, it couldn't be simpler. Unscrew a light bulb that uses a lot of electricity and replace it with one that uses much less. While it sounds like a promising idea, it turns out that the long lasting, swirl-shaped light bulbs known as compact fluorescent lamps are to the nation's energy problem what vegetables are to its obesity epidemic: a near perfect answer, if only Americans could be convinced to swallow them.
But now Wal-Mart Stores, the giant discount retailer, is determined to push them into at least 100 million homes. And its ambitions extend even further, spurred by a sweeping commitment from its chief executive, H. Lee Scott Jr., to reduce energy use across the country, a move that could also improve Wal-Mart's appeal to the more affluent consumers the chain must win over to keep growing in the United States.
''The environment,'' Scott said, ''is begging for the Wal-Mart business model.''
It is the environmental movement's dream: America's biggest company, legendary for its salesmanship and clout with suppliers, encouraging 200 million shoppers to save energy.
For all its power in retailing, though, Wal-Mart is meeting plenty of resistance - from light bulb makers, competitors and consumers. To help turn the tide, it is even reaching out to unlikely partners like Google, Home Depot and Hollywood.
A compact fluorescent has clear advantages over the widely used incandescent light - it uses 75 percent less electricity, lasts 10 times longer, produces 450 pounds fewer greenhouse gases and saves consumers $30 over the life of each bulb. But it is eight times as expensive as a traditional bulb, gives off a harsher light and has a peculiar appearance.
As a result, they have languished on store shelves for a quarter century; only 6 percent of households use the bulbs today.
Which is what makes Wal-Mart's goal so wildly ambitious. If it succeeds in selling 100 million compact fluorescent bulbs a year by 2008, sales would, almost overnight, increase by 50 percent, saving Americans $3 billion in electricity costs and avoiding the need to build additional power plants for the equivalent of 450,000 new homes.
That would send shockwaves - some intended, others not - across the lighting industry. Because compact fluorescent bulbs last up to eight years, giant manufacturers, like General Electric and Osram Sylvania, would sell far fewer lights.
Because the bulbs are made in Asia, some American manufacturing jobs would be lost. And because the bulbs contain mercury, there is a risk of pollution when millions of consumers throw them away.
Michael B. Petras, vice president of lighting at GE, concedes that ''the economics are better with incandescent bulbs.''
All that has only spurred Wal-Mart to redouble its efforts - and, in typical fashion, it is asking those who may be hurt by the change to help achieve it.
During an extraordinary meeting in Las Vegas in early October, competing bulb makers, academics, environmentalists and government officials met to mull over, at times uncomfortably, how Wal-Mart could sell more of the compact fluorescent lights.
The proposals developed at what Wal-Mart dubbed the ''light bulb summit'' ranged from the practical (advertise the bulbs on the back of a Coke 12-pack) to the quixotic (create a tax on incandescent bulbs to make them more expensive).
Selling 100 million bulbs ''is not a slam dunk by any stretch of the imagination,'' Stephen Goldmacher, an executive at Royal Philips, the Dutch company that is one of the world's largest light bulb makers, told the group. ''If this were easy, it would have happened already.''
The attendees did not need to look far for evidence. Wal-Mart had asked the owners of the Mirage Hotel and Casino, where the conference was held, to begin using the energy saving bulbs in its guest rooms in the time for the meeting. The hotel politely declined.
It is not alone. Compact fluorescent bulbs, introduced in the United States with much fanfare in 1979 by Philips just as the nation's second energy crisis of the decade was getting underway, have never captured the public imagination.
The new bulbs - lighted by sparking an efficient chemical reaction, rather than heating a metal filament - were ungainly, took several seconds to light up and often did not fit into traditional light fixtures.
Since then, refinements have made them far more convenient to use, reducing their size and price as well. But Wal-Mart sold only 40 million in 2005, compared with about 350 million incandescent bulbs, according to people briefed on the figures.
To show customers how versatile the bulbs could be, Wal-Mart began displaying them inside the lamps and hanging fans for sale in its stores. Sales nudged up further.
To explain the benefits of the energy efficient bulbs, the retailer placed an education display case at the end of the aisle, where it occupied 4 feet of valuable selling space - an extravagance at Wal-Mart. Sales climbed even higher.
In August 2006, the chain sold 3.94 million, nearly twice the 1.65 million it sold in August 2005, according to a person briefed on the numbers.
And it would have stayed that way unless Wal-Mart decided to go green. More than a year ago, Scott, the company's chief executive, began reaching out to a handful of environmental groups, telling them that Wal-Mart, long regarded as an environmental offender, wanted to become a leader on issues ranging from fuel efficiency to greenhouse gas emissions.
Scott viewed such a move as a way to use Wal-Mart's clout to improve the environment, cut costs and, of course, burnish the company's bruised image. In September 2005, Scott and his environmental guru at Wal-Mart, Andy Ruben, drove to the Mount Washington Observatory in New Hampshire with Steve Hamburg, an environmental studies professor at Brown University, and Fred Krupp, the president of the advocacy group Environmental Defense. At the summit meeting, where scientists measure climate change 24 hours a day, the men discussed global warming, acid rain, the hole in the ozone layer and what Wal-Mart could do about them.
''You need to look at what is being sold on the shelf,'' Hamburg recalled telling Scot. He began talking excitedly about compact fluorescent bulbs. ''Very few products,'' he said, ''are such a clear winner'' for consumers and the environment.
Soon after returning from the trip, Wal-Mart publicly embraced the bulbs with the zealotry of a convert. In meetings with suppliers, buyers for the chain laid out their plans: lower prices, expanding the shelf space dedicated to them and heavily promoting the technology.
Light bulb manufacturers, who sell millions of incandescent lights at Wal-Mart, immediately expressed reservations. In a December 2005 meeting with executives from General Electric, Wal-Mart's largest light bulb supplier, ''the message from GE was, 'Don't go too fast. We have all these plants that produce traditional bulbs,' '' said one person involved with the issue, who spoke on condition of anonymity, citing an agreement not to speak publicly about the negotiations.
The response from the Wal-Mart buyer was blunt, this person said. ''We are going there,'' the buyer said. ''You decide if you are coming with us.''
In the end, as Wal-Mart suppliers generally do, the bulb makers decided to come with the company.
Philips, despite protests from packaging designers, agreed to change the name of its compact fluorescent bulbs from ''Marathon'' to ''energy saver.'' ''When Wal-Mart sets its mind to something with a narrow objective like that, they are going to make it happen,'' said Jim Jubb, vice president of consumer product sales at Sylvania.
At the same time that it leaned on suppliers, Wal-Mart began testing ways to better market the bulbs. In the past, Wal-Mart had sold them on the bottom shelf of the lighting aisle, forcing shoppers to bend down. In tests that started in February, it gave the lights prime real estate at eye level. Sales soared.

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